Indian Railway Finance Corp Ltd

The Indian Railway Finance Corporation Limited (IRFC) is a public sector undertaking (PSU) under the Ministry of Railways, Government of India. Established in 1986, IRFC serves as the dedicated financing arm of the Indian Railways, primarily tasked with mobilizing funds from domestic and international financial markets to meet the funding requirements of the Indian Railways.

Here are some key points about the Indian Railway Finance Corporation Limited (IRFC):

Role and Function: IRFC's primary function is to raise financial resources for the Indian Railways. It achieves this by issuing various financial instruments such as bonds and loans. These funds are used to finance the acquisition of rolling stock (railway vehicles like locomotives and coaches), railway infrastructure projects, and other capital expenditure needs of the Indian Railways.

Fundraising: IRFC is authorized to raise funds through domestic and international financial markets, including issuing tax-free bonds, masala bonds (rupee-denominated bonds issued overseas), term loans, and other financial instruments. These funds are then lent to the Indian Railways at competitive interest rates.

Government Backing: IRFC enjoys the backing of the Indian government, which enhances its creditworthiness in financial markets. The government guarantees the principal and interest on bonds issued by IRFC, making them attractive to investors.

Financial Services: Apart from raising funds, IRFC also provides various financial services to the Indian Railways, including financial advisory services, lease financing, and project financing.

Profitable Entity: IRFC has a history of being a profitable entity, generating revenues primarily from the difference between the cost of borrowing and the interest rate at which it lends to the Indian Railways.

Contributions to Railways: The funds raised and provided by IRFC play a crucial role in the development and expansion of the Indian Railways, helping to modernize the railway infrastructure, purchase new rolling stock, and improve passenger and freight services.

Government Diversification: In January 2021, the Indian government announced its plans to divest a part of its stake in IRFC through an initial public offering (IPO). This move aimed to raise capital for the government and increase the company's public ownership.